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Home finance spread their targets towards a loan for higher education

354 Aug 21, 2013

Higher education in classes or courses in reputed colleges and universities is too expensive. Most of the families of the aspiring students do not find any ways to bear the huge expense. Therefore they are forced to take loans from either banks or other sources including friends or relatives. But recent few years marked a huge rise in taking educational loans for higher education. A recent research found that housing loans providing companies have started offering loans for educational purposes. The increasing demand for the loans for educational reasons has let the housing loan companies find a profitable way.

There has been a huge rise in the craze for studying professional courses. A study found that almost Rs. 80,000 crore has been expended by the Indians in higher education last year. Most of the estimated expenditure went from studying professional degree courses. Reports say that the count has been big enough to rise in the growth up to 20%-22% per year. The colleges and universities offering higher education and professional degree constitute students up to 15-16 million.

Earlier, higher education and having a professional degree from reputed colleges were a trend for very bright students or students having a strong financial background. But now it has been an aim for every student after graduating. Loans for educational purposes are taken by people having both low as well as high financial background.

Managing director of HDFC, Renu Sud Karnad, says that most of the aspiring students with a perfect qualification to pursue any course gets disappointed with the high fee structure. The managing director says that they want to aid those students with the financial support. Sometimes banks charge a high rate of interest for the educational loans which ultimately, at the end, counts to a huge amount. Hence most of the students to do not prefer to take loans from banks.

HDFC believes that they not only help the students with their studies but also helps in the country’s socioeconomic progress. The first companies to discover the potential and give out education loans were Dewan Housing Finance and HDFC. HDFC started its venture with the introduction of Credila in the year 2009. The Diwan Housing Finance started its business with an investment of less that Rs. 25 crore.

HDFC has recorded its profit in educational loans business through Credila from an investment of approx Rs25 crore to over Rs.1, 000 crore this year. The managing director, Kanad, says that the loan book rose about 80% from the previous years. The FY13 also indicates that the HDFC has made a rise in Credila and they have provided loans to students from about 2,000 institutes in about 36 different countries for about 694 different courses.

But there has been a record of high rises in defaulters in loans for educational purposes. In spite of such rise in defaulters, the companies continue their venture. Sometimes this company has recorded to get as much as 15% defaulter in their portfolio record. On the other hand, some are even called by the court orders and asked to deny their loans to the students.

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